The founder of Big Sky Farms is optimistic the company will emerge from court protection with a plan to continue operating and pay off its debts.
Florian Possberg said he is disappointed the company is in trouble, but isn’t surprised considering the state of the industry.
“The hog industry has always been cyclical, but you have to go back to the Great Depression of the ’30s to find three consecutive years of losses,” he said.
The company entered court protection Nov. 10. It has until the end of the month to develop a plan and present it to the court for approval.
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Possberg and his partners formed the company in 1995 and built Western Canada’s first integrated three-site units. He had already been in the hog business for 20 years on his own.
Over the next 10 years, Big Sky expanded several times to become the largest hog producer in Saskatchewan and among the top three in Canada.
In 2008, Possberg moved from president and chief executive officer to deputy chair of the board.
Although he no longer had day-to-day involvement with the company, he said he is a shareholder and is owed a substantial amount of money.
A list of creditors filed among the court documents shows that Big Sky owes Possberg more than $500,000.
“This certainly has been a big hit for me personally,” he said.
The company also owes $14.7 million to unsecured creditors, including farmers, truckers, rural municipalities and other suppliers.
Farmers angry that they haven’t been paid have asked the provincial government to step in. The government owns 64 percent of the company’s shares because of a $30 million investment.
NDP leader Dwain Lingenfelter said the government has a responsibility to settle up.
“They failed to step in to protect the hog industry in the first place,” he said.
The NDP was in power when most of the government investment was made.
It began with a $500,000 equity investment through the former Saskatchewan Opportunities Corp. in 1997.
In July 2000, Crown Investments Corp. III invested $8.5 million, followed by another $6.5 million the following November.
CIC invested a further $1.8 million in equity in June 2005.
While the government was investing, so was Crown Life through its Crown Fund. Crown Life was sold, and when the deal was finalized in June 2007, the government inherited a $9.1 million equity investment through its shares in Crown Life.
Finally, in December 2007, Investment Saskatchewan, now known as CIC Asset Management, provided $3.5 million in subordinated debt.
The total government investment is $26.4 million in equity and $3.5 million in debt.
Investment Saskatchewan is listed as a secured creditor for $4.4 million because of unpaid interest worth about $900,000, said a CIC spokesperson.
Possberg partially blamed safety net programs that don’t work for large companies. Payment caps on programs such as the former Canadian Agricultural Income Stabilization program meant large producers didn’t receive the benefit.
For example, he said CAIS paid $30 or $40 per hog to some producers in 2008.
“The most (Big Sky) could receive was $2.61 a hog,” he said.
Being a large company played against Big Sky in tough times.
“In good times it’s an efficient way to run a business,” he said.
